Case Studies: Koito Manufacturing Company

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30 CORPORATE GOVERNANCE Case Studies: Koito Manufacturing Company That was the most unusual shareholders meeting I have ever attended in my life. But many questions went unanswered: the meeting was a sham. We own 20% of that company, more than any other shareholder, and yet we were refused a seat on the board, when other shareholders have theirs. I'm beginning to wonder if the reason I'm denied this right is because I'm not Japanese. I will be raising this at Senate hearings next month. Mr. T. Boone Pickens, a Texan businessman, after attending the meeting of Koito Manufacturing Company in Tokyo, June 1989 oped to produce all-plastic head lamps molded to the exact aerodynamic specifications demanded by modem car design. Koito had three production plants in the United States. Analysts predicted good longterm prospects for Koito, based on sound technology, efficient production, and strong customer linkages, although they recognised that Koito fortunes were dependent on the well-being of the Japanese car industry. The Boone Pickens bombshell Then on 3 April 1989 Mr. T. Boone Pickens, a Texan businessman, well known for the successful acquisition of US oil companies over the previous five years, announced that he held a 20.2 per cent stake in Koito. The shares were held by his in-house merchant banking arm, the Boone Co., who had bought 32.4 million shares. The cost reported in the Tokyo press suggested a price "close to US$800 million". This was Japan's first hostile investment raid by a foreign company. The Japanese finance and investment community was surprised and nervous about this unwelcome intrusion in their markets. There had, of course, been other major investments in, indeed acquisitions of, Japanese companies by foreigners; but previously they had always been completed with the Japanese directors' knowledge and approval. It was reported that

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